Oil Drops Near 12-Year Low, Gold And
Grains Rise
06:40 p.m Nov 18, 1998 Eastern
NEW YORK (Reuters) - Oil prices bounced near
12-year lows Wednesday as the market continued to
send a strong signal to the Organization of Petroleum
Exporting Countries to either cut supplies or face
single-digit prices.
At the New York Mercantile Exchange, crude oil for
December delivery closed 31 cents lower at $12.14
a barrel after dropping as low as $11.65 during the
day.
That price compares to a low point of $11.40 a
barrel reached last June, the lowest oil price since
August 1986.
Higher prices for gold and grains countered some of
the overwhelming bearish sentiment in oil, cushioning
the drop in commodity indexes. But the Goldman
Sachs Commodity Index of 22 commodity futures
still ended 0.35 point lower at 143.16.
Oil prices jumped above $14 a barrel late last week.
But a weekend deal averted a U.S.-led air assault on
Iraq over frustrated United Nations weapons
inspections. The deal eased fears of disruption to oil
supplies and returned the market's focus to the
worldwide abundance of oil and weak Asian
demand.
Meanwhile, OPEC officials set to gather next week
in Vienna appear helpless to react to one of the worst
oil price slumps in history.
''Facing a massive stock overhang and weak
demand, there is not much more OPEC can do these
days,'' London's Center for Global Energy Studies
said in a report.
OPEC has watched its efforts this year to rescue the
market ruined by a towering stockpile of crude and
refined products and failing demand, in particular
from Asian consumers.
Having already cut supplies 10 percent and made no
impact on prices, oil producers are in poor shape to
act further.
''If the expectation is to cut more, maybe it is too
much for OPEC to handle that,'' Sayed Mehdi
Hosseini, Iran's deputy oil minister for international
affairs, told the annual Oil and Money conference in
London Wednesday.
Adrian Lajous, the head of Mexico's state oil
company Petroleos Mexicanos, concurred. ''At
present additional output curtailment by producers
does not appear feasible,'' he said.
Reflecting those sentiments, oil product prices
continued to fall in line with crude. NYMEX
December gasoline ended 0.86 cent a gallon lower at
37.20 cents, while December heating oil dropped
0.39 cent a gallon to 34.71 cents.
Gold prices climbed to a four-week high, helped by a
proposal to issue a Euro gold coin in Europe and
recovering demand for gold in Asia. Palladium prices
hit a two-month high on a forecast for record
palladium use this year.
Gold for December delivery at the COMEX ended
up $3.30 at $298.20 an ounce after the European
Parliament called for European Union nations to mint
a gold Euro coin by 2002. But the measure faces
considerable further debate.
December silver ended 4.5 cents higher at $4.972 an
ounce.
Palladium prices jumped after the trading house
Johnson Matthey said worldwide use of the metal
was expected to rise about 8 percent to a record 8.2
million ounces in 1998, as automobile manufacturers
use more palladium catalysts to meet new emission
standards in the United States and Europe.
NYMEX December palladium ended $11.65 an
ounce higher at $292.50, the highest price in two
months.
Grain prices got a shot in the arm after U.S.
government officials said they may expand a 2.5
million metric ton wheat donation program to needy
nations and aggressively use government export
credits to help sell farm goods in 1999.
U.S. officials were also said to be considering fresh
credits of up to $1 billion to South Korean buyers.
At the Chicago Board of Trade, December wheat
ended 5 cents higher at $2.93 a bushel, December
corn 2-1/4 cents higher at $2.21-1/4 a bushel and
January soybeans 2-1/2 cents higher at $5.84-1/2 a
bushel.
Copyright 1998 Reuters Limited. |
